A Civilian Criticism of the Wage Hike















This is very similar to the last article in that it voices concerns of Tara Dennis, a low-wage worker, over the increase of the minimum wage. Her concerns are not, however, based on the fact that a wage hike drives prices up. She seems to think of it more as a too-little, too-late situation.

Wages for unskilled work positions have increased beyond the federal minimum wage in the past decade, but have not grown nearly as fast as the cost of living. A spokesman for the Economic Policy Institute chimes in that the policy being proposed by the Democratic Congress is actually very modest, considering the huge gap between cost of living and annual minimum wage income. The increase would only raise wages for 4% of the work force.

By 2009, when the Democrats would like the wage to be at $7.25, this wage would have the spending power that $6.75 has today. The wage increase is, according to the article, a largely symbolic political effort, rather than an actual way to get people out of poverty. The nation's highest minimum wage is in Washington--a full-time worker there will make $16,515 a year before taxes. However, the federal poverty level for a family of three is $16,600.

The woman I mentioned up at the start is quoted later on, saying that it ended up being cheaper for her to be unemployed, where she could receive food stamps, subsidized housing, and be available to watch her kids instead of putting them in daycare.

Another compelling point made is that about 28% of the homeless people in Louisville, KY's homeless shelters are employed. This is a tough statistic to nail down, however, because it is hard to gauge how many homeless people go to shelters and how many remain out on the streets, so I'm not sure how much stock to put in it.

25% of minimum wage earners are teenagers, while 50% are over the age of 25. This statistic helps prove my point that of the already-small population paid the minimum wage, a large chunk are not of voting age and another chunk (the remaining 25% between the ages of 19-25) is of generation Y, known for its political apathy. This is part of why wages have not budged and why it has been nearly impossible to make any federal headway with this public policy topic.

Senator Statement on Economic Losses of Minimum Wake Hike


This is a statement issued by U.S. Senator Mike Enzi (R-WY) as a response to senators offering up politically-driven, unrelated amendments to the welfare reform bill (TANF-Temporary Assistance for Needy Families) as it passed through the Senate in April, 2004. One such amendment involved a minimum wage increase and this is his case against such an increase.

He begins with a hard-hitting statement that gets straight to the core of the problem with politics:

"There's an effort underway to put up a smoke screen of unrelated amendments that mask election year politics in misleading rhetoric. It's time for us to look beyond the smoke screen and see who is really helped – and hurt – by Senator Kennedy's amendment to raise the Federal minimum wage."

He is right in stating that they are trying to use amendments as a means to achieving election-year ends. There has been an outpouring of public support for a minimum wage increase, and the supporters in the Senate, in spite of some alternative motivations, will have a happy group of constituents if they pass this increase, and this will of course help them in the polls.

I don't know if I agree with him on the economic side, though. He uses basic supply and demand reasoning to claim that a price increase always results in a fall in demand. In this case, we are looking at the labor market and with the price of labor rising, he believes the demand for labor will fall. He then goes on to say that it hurts small businesses especially, which is backed by a letter he cites from a constituent: "I have made it a habit from time to time to ask an employer if raising the minimum wage makes a difference to his business. No matter if he pays one person or dozens, the answer is always the same. ‘There are X number of dollars in the budget and I can't exceed that amount. If it means cutting hours or firing workers, I have to do it to stay within the budget.'" Smaller businesses have smaller budgets, so I think Enzi is trying to claim that this would cause them to incur a bigger loss. I fail to see the logic there, though--if they have a smaller budget, they also probably have fewer employees, therefore the wage increase would affect both large and small businesses proportionately. The only difference I see is that larger businesses may have more wiggle room in their budget, but Enzi does not use this reasoning. Perhaps it is just implied.

There is also the claim that grocery prices will rise almost immediately after a wage increase, and not only will this bring minimum wage earners back down, it will also cause regular-wage earners to absorb these new costs, technically resulting in a pay-cut for them. This is not necessarily true--other articles I have read say that part of the reason a minimum wage increase would be so costly is because employers would have to raise the pay of all workers to maintain levels of superiority. The public largely supports this bill, and every single public newspaper article I read talked about an increase in all wages at these types of businesses, not just the minimum wages. People may not be so supportive if Enzi's opinions were published in a newspaper--I don't think the supporters have considered their responsibility for absorbing these costs in the form of price increases.

Given that the minimum wage debate stems from the growing wealth gap in the United States, it is worth it to look at exactly who is in support of it, who ignores it, and who is against it. The wealthiest people have huge disposable incomes, and if the minimum wage caused their steak dinner to increase from $50 to $75, it may not cause more than a grumble of complaint, if even that. In the articles I have read, the wealthy do not land on an obvious side of the debate--some CEOs think a wage increase is a good idea, while some wealthy politicians are opposed. When the latter group refrains from passing minimum wage increases, I don't think it is because they are afraid their meals will start costing more--I think they just don't care enough about a law that affects such a small group of people. The attention the minimum wage has garnered in recent years is not due to an increase in minimum wage earners, but an increase in the number of citizens aware of this problem. More people care about the issue, so politicians can no longer pass it off as something that affects a minute percentage of the population. More of the population is catching on and more are demanding action.

From what Enzi writes, however, it seems like poor people should not be asking for a bill like this. He says that poor people would shoulder the cost of resulting high prices, but didn't he already say that regular wage earners would shoulder the cost? It makes more sense for him to say that those who do not earn the minimum shoulder more of the cost, because they are not getting a legally mandated pay increase. However, they would probably get some form of pay increase so the resulting cost would fall upon both groups equally.

I do agree with Enzi, however, when he discusses the variations in prices across the nation. I think that the fact that half of the country has raised their wage shows that they are responding to their own state's price levels. (On a side note, it is a little confusing that big cities like New York and Chicago have not been catching up to others like Santa Fe). I think the legislation is getting pushed through on a federal level because, although states have taken it upon themselves to adjust their own wages, $5.15 is no longer a realistic wage in any state. States will continue to set their own according to their own guidelines, but people are realizing that with inflation, no one can earn $5.15 at a full-time job and get by, and people are seeing how unjust and nonsensical that is.

A lot of states are beginning to set wages that are indexed for inflation. I do not know enough about economics to say what would happen if they tried this on the federal level, but it seems as if it could be a possible solution to this never-ending debate over when and by how much to increase the federal minimum wage.

Pelosi to Fast-Track Minimum Wage Increase

This is another article about the possibility of a federal minimum wage increase as the 110th Congress convenes for the first time in January, 2007. This article says the bill they will promote was proposed by George Miller (D-CA), the incoming chairman of the House Education and the Workforce Committee. It appears to make the same proposals as Kennedy's failed bill earlier.

According to Pelosi's spokesman Brendan Daly and lobbyists, the bill will go straight to the House floor, bypassing the Education and Workforce committees. Pelosi prefers a stand-alone minimum wage bill that is not tied to other legislative efforts, something that has complicated the passing of such an increase in the past. It seems like these other bills are tacked on not only to achieve compromise or bipartisan support, but in general to make the group affected by the bill more broad. There is a strong feeling of support from community groups like ACORN for a minimum wage increase, but in reality a very small portion of the population gets paid the minimum wage, and a large chunk of that population may not even vote yet.

The article provides a good brief summary of the issues being debated. Proponents argue that it will aid the working poor, while business groups counter that it could lead to higher prices for goods and services and force companies to cut low-skilled jobs that will make it difficult for people to get entry-level jobs. Economically speaking, an increase in the price of labor would either have to occur with a subsequent decrease in supply or an increase in demand. Assuming that demand for labor stays the same (or even decreases, as is predicted by some) the supply will have to increase and this will cut back on the number of jobs available.

Senate lobbyists also think the bill will be advanced thru committees, where they will try to make the bill more appealing to proponents. For example, they may include a proposal of faster depreciation of restaurant buildings. This would not be ideal for Pelosi, who wanted this bill to stand alone, but it may be necessary to garner the necessary support.

Illinois Senator Recalls Minimum Wage Increase Bill

This is an article giving an update on the Illinois minimum wage increase situation. Apparently, the bill had been approved by the House and Senate and was on its way to the governor when a senator said she would like to make changes to the bill.

The Senate also created a supplemental spending bill that contains money to give lawmakers and other state officials a 15.6% pay raise, but this won't have the opportunity to be approved until January. This bill will most likely go through quietly and quickly, not garnering nearly as much media attention as the minimum wage.


Senator Kimberly Lightford was the main sponsor of the minimum wage bill, and is recalling it, so to speak, in order to tweak a provision that allows employers to pay their teenage workers .50¢ below the minimum wage. I happen to think this is a great provision, especially if the arguments given supporters have been about the wages needed to take care of a family and stay out of poverty. Teenagers working minimum wage jobs are probably not often concerned about staying above the poverty line.


Lightford removed the provision when the Senate first passed the bill, but Madigan put it back in when the House approved of the bill. Madigan was hoping to appease those businesses upset about the minimum wage hike, and I understand his logic there but I don't agree with another provision that allows employers to pay .50¢ below the minimum wage for a worker's first three months at a job. It is, after all, a minimum, and if they are eligible for a raise after three months, pay them more than the minimum wage. This could also cause a loophole where employers fire workers after their first three months, but I am not sure how likely this is because wasting that time to train would decrease productivity and likely be bad for business. Lightford is hoping to work on amendments during the spring session.

With the sudden last-minute change made by a Senator, the House now needs to look over the bill again. This back and forth may keep the increase from passing until after a federal increase occurs, a plan of action that a Republican senator voiced support for in the article. Lightford is a Democrat and her motives for stalling the legislation probably do not have to do with waiting for a federal bill; her moral sticking points and, in my opinion, pickiness is making it difficult to pass the bill. I hope that someone proposes the compromise of allowing the teenager provision and getting rid of the three-month provision.

The article made no mention of Chicago's struggles with the Big Box Ordinance just a few months ago, and I wonder what impact that may have had on the passing or perhaps expediting of this legislation. If my theory about inaction when it affects such a small group of people applies at all here, it would seem like the larger state government is taking on an issue that couldn't gather enough steam on a city level. That's not to say the big box issue didn't pack a punch, because they did establish quite a movement, but Mayor Daley's comments about handing it over to larger government bodies to deal with may have inspired those bodies to take action.

Illinois to Raise Minimum Wage to $8.25

This is an Associated Press article about the proposal [SB1275] to increase the Illinois state minimum wage by $1 as of July 2007, and eventually to $8.25 in 2010. The bill also allows the state's minimum wages to keep pace with inflation. It was approved by the Senate but not the House when this was written.

The article starts off sounding incredibly biased, but is really just trying to paint a picture of this battle from both sides. Those in support believe it affects people who are trying to support families, and the increase would make for healthier children and better family environment. Those in opposition argue that it affects those in households making more than 55,000 a year, mainly teenagers.

Estimates from the governor's office claim that 308,000 Ilinoisans make the minimum wage and an additional 339,000 people making just above the minimum wage that would also likely see increases. The state population is 12,763,371.

The bill might get stuck in the House until next year because the Speaker Michael Madigan hasn't shown any interest in expediting it during the fall session. People have taken issue with the bill's provisions that allow for the wage to increase with inflation, and restaurant owners also feel it shouldn't affect waiters, who make most of their money in tips anyways. This must be why the main opposition to a federal increase was quoted as coming from the National Restaurant Association in past articles.

People express a lot of opposition based on the negative effects on business and the economy, but there has actually been a substantial amount of economic growth--more people are working and unemployment rates dropped. The following diagram shows the percentages of people who get paid the minimum wage in each individual state. Under10% of Illinois workers would be affected by this legislation.



I think that by far the most interesting and meaningful debate on this topic is who gets affected--teenagers or low-income families. Some policies get passed so quickly while others get stuck, and minimum wage policies seem to have a sticking tendency. How else to explain the decade without a federal increase? I think this is largely because of who is affected--it is difficult to get legislation moving if it only affects a small portion of the population. It gets even harder if part of the group being affected doesn't care or doesn't vote [teenagers].